ENRC Gains Most in 7 Months in London on Glencore Bid Report

June 13 (Bloomberg) -- Eurasian Natural Resources Corp., a
producer of metals in Kazakhstan, advanced the most in seven
months in London trading after the Sunday Times reported
Glencore International Plc was studying a takeover.

“An acquisition of ENRC would significantly bolster the
asset base of Glencore,” Collins Stewart Plc analysts wrote
today in a note, adding that a full takeover is unlikely to be
approved by the Kazakh government. Buying 26 percent of the
company from Kazakhmys Plc is “more realistic,” they said.

ENRC fell to a 23-month low on June 10 after shareholders
ousted two independent board members and management began a
review of governance. Glasenberg has also held talks with the
Kazakh government, which holds 12 percent of ENRC, the Sunday
Times said, citing a separate unidentified official. The company
hasn’t made a formal bid, the London-based newspaper reported.

Bid Unlikely

“We would see an all-out cash bid near-term from Glencore
for ENRC as highly unlikely and the Swiss-based group issuing
more equity is not an option for at least six months,” Miriam
Hehir, an RBC Capital Markets analyst in London, said today.
“Glencore highly values its investment-grade credit ratings,
which help to underpin its profitable marketing business, and we
do not believe it would jeopardize these ratings.”

Glencore is a potential buyer of Kazakhmys’s stake in ENRC,
Liberum Capital Ltd. said in January. Kazakhmys, Kazakhstan’s
biggest copper miner, is considering its options, including a
possible sale of the stake, CEO Oleg Novachuk said last year.

“Glencore’s trading business would benefit from a
significant rise in its market share of ferrochrome and
aluminum,” Collins Stewart said. “An acquisition would also
provide an entry into iron ore, with assets and exports in
Kazakhstan and Brazil.”